Sector

Companies grouped by what business they are in

In detail

Sectors sort companies by their line of business — banking, autos, pharmaceuticals, telecoms. Companies in the same sector tend to feel the economy and regulation in similar ways, so comparisons belong within a sector. Typical levels for ratios such as P/E and P/B differ sharply from one sector to the next.

Example

A P/E of 15 reads as high in a sector averaging 10, and as low in one averaging 25.

Related terms

P/E ratio P/B ratio Stock index Defensive and cyclical stocks

Read in the app (App Store)

For learning, not investment advice. Decisions are your own.